The diagram below shows the domestic demand and supply curves for denim jeans in Canada.The prevailing world price is P W .Assume that all jeans are identical. FIGURE 33-2
-Refer to Figure 33-2.In the presence of free international trade,Canada's consumption of denim jeans will be the quantity

Question

The diagram below shows the domestic demand and supply curves for denim jeans in Canada.The prevailing world price is P W .Assume that all jeans are identical.  FIGURE 33-2
-Refer to Figure 33-2.In the presence of free international trade,Canada's consumption of denim jeans will be the quantity

Quizplus · Accepted Answer

In the presence of free international trade, Canada will import jeans from the rest of the world, where the prevailing world price is lower than the domestic equilibrium price. As a result, the domestic quantity demanded will increase to QS1U1B15, which is the quantity demanded at the world price level. Therefore, the answer is E.

The Diagram Below Shows the Domestic Demand and Supply Curves